The International Monetary Fund has upwardly revised its outlook for real GDP growth in Malaysia from 4.3% to 4.4%.

Last year, the country’s economy grew by 3.7%.

As part of its World Economic Outlook (WEO) entitled “Steady but slow, resilience amid divergence,” the IMF forecast Malaysia’s GDP growth to stay at 4.4% in 2025 .

In addition, it predicts Malaysia’s current account balance to hit 2.4% in 2024 and 2.7% in 2025.

In terms of global growth, the IMF forecast the figure to reach 3.2% last year, and to remain at the same pace in 2024 and 2025, The Sun Malaysia reports.

“The forecast for 2024 is revised up by 0.1 percentage point from the January 2024 WEO update and by 0.3 percentage points from the October 2023 WEO,” the IMF said.

The rate of growth is relatively subdued compared to historical benchmarks, influenced by various factors. These include immediate concerns such as elevated borrowing expenses and the withdrawal of fiscal support, as well as the impact of the COVID-19 pandemic and Russia's invasion of Ukraine. 

Additionally, sluggish productivity growth and escalating geo-economic fragmentation contribute to the overall deceleration.

According to the IMF, risks to the global outlook are now broadly balanced.

Furthermore, an excessively relaxed fiscal policy and optimistic projections may temporarily boost economic activity, but could lead to potentially expensive policy corrections down the line. 

There's a possibility that inflation might decline more rapidly than anticipated, especially with continued improvements in labour force participation, potentially prompting central banks to expedite their easing strategies.

Productivity could be given a boost by artificial intelligence and stronger-than-forecast structural reforms, the IMF added.

Global headline inflation is set to decline to 5.9% in 2024 and 4.5% in 2025 from an annual average of 6.8% last year, with advanced economies returning to their inflation objectives sooner than emerging market and developing economies, the IMF stated.